NEW YORK--(BUSINESS WIRE)--Companies are increasingly recognizing climate risk in their supply
chains, but investment in emissions reductions programs is going down, according
to research published today by CDP and Accenture (NYSE:ACN).
Importantly, a clear link is established between stalling progress on
emissions reductions within supply chains and the uncertain regulatory
framework.

According to the report, “Collaborative
Action on Climate Risk,” ever more companies are reporting on their
emissions reductions programs and there are clear financial benefits
from investment in sustainability measures. However, average monetary
savings from emissions reductions efforts have fallen 44 percent in the
past 12 months. The report points to an ever widening gap – highlighted
last year – between measures taken by large corporates who are members
of CDP’s supply chain program and those by suppliers.

The research is based on information from 2,868 companies including some
of the world’s largest corporates, reflecting a rise in participation of
more than a fifth since last year. These produced 14 percent of 2013’s
global industrial emissions1. The 64 CDP supply chain members
behind the request to this supply chain represent a combined annual
spending power of almost US$1.15 trillion.

Almost three quarters of companies identified a current or future risk
related to climate change, according to the report, while 56 percent of
companies said that consumers are becoming more receptive to low-carbon
products and services. Regulatory uncertainty is making companies
cautious about investing in emissions reductions and supply chain
sustainability. Ninety percent of companies that identify a current or
future risk cited regulatory risk as a barrier to investment.

Investment in emissions reductions programs has declined in the past
year and is shorter term in focus, according to respondents. Seven out
of 10 sectors report investment falling from earlier years. Shorter
pay-back initiatives (less than three years) are on the rise with these
almost doubling between 2011 and 2013. The average sum invested per
reporting company has dropped 22 percent since last year.

To address policy uncertainty, the survey asked which policy programs
would be most supported by businesses. Of the companies reporting
engagement with policy makers, support was strongest for policies
promoting energy efficiency, and clean energy generation, supported by
81 percent of responses. Mandatory carbon reporting was supported by 67
percent, but cap and trade programs received the unqualified support of
just 43 percent of responses.

The report reveals that the most important determinant of improved
emissions reduction performance is collaboration across the supply
chain. There is enormous scope for more collaboration, with program
participants identifying 2,186 collaborative opportunities.
Additionally, companies that engage with two or more suppliers,
customers or other partners are more than twice as likely both to see a
financial return from their emissions reduction investments and to
reduce emissions.

The CDP and Accenture analysis shows that companies are often
misdirecting their emissions reduction efforts with investment not
closely correlated with proven emissions or monetary savings. Suppliers
and member companies are at odds: suppliers identified process emission
reduction and product design as the most promising collaborative
approaches. Member companies on the other hand favor behavioral change
initiatives and transportation and fleet investments.

To address this, a new CDP supply chain initiative has been launched to
incentivize suppliers: Action Exchange2 will drive targeted
action on the most cost effective emissions reductions. Companies that
have already joined the initiative and are asking their suppliers to
participate include Bank of America, L’Oreal, Philips and Walmart, with
significant returns anticipated.

Questioned for the first time by CDP on water risk, suppliers recognize
the need for a broader view of supply chain sustainability, with
linkages made between water and carbon emissions. More than half the
companies cite water scarcity as the greatest water-related concern.

CDP’s chief executive officer Paul Simpson says: “This report
establishes that although companies recognize that climate and water
risks are on the rise, a mixed regulatory regime is making decisive
action difficult. However growing participation in our supply chain
program and the positive reception to Action Exchange demonstrates that
businesses want to leverage their relationships with their suppliers to
realize opportunities and minimize climate and water related risks.

“When governments introduce a more realistic global price on carbon we
expect significantly more investment in emissions reductions from
corporates.”

“This report provides clear evidence that those who are most transparent
about their climate change risks are more likely to achieve the greatest
emissions reductions,” said Gary Hanifan, global sustainability
lead for supply chain, Accenture. “And they are also more likely to
enjoy monetary savings as a result of their responses to climate change
risks. But the return on investment by the most proactive companies will
not reach its full potential unless those companies can encourage their
suppliers to follow their lead.”

1 Reported emissions percentage accounts for direct scope 1
emissions. Total global emissions as based on the World Resources
Institute CAIT2.0
2009.

2 The Institute for Industrial Productivity and the
University of Minnesota’s NorthStar Initiative for Sustainable
Enterprise (NiSE) at the Institute on the Environment will conduct the
analysis in partnership with the CDP initiative. The initiative will
also involve identifying and selecting technology and service providers
to undertake the projects identified. While the initiative will come at
no cost to participating suppliers, they will be required to give
serious consideration to the opportunities identified.

About CDP

CDP is an international, not-for-profit organization providing the only
global system for companies and cities to measure, disclose, manage and
share vital environmental information. CDP works with market forces,
including 722 institutional investors with assets of US$87 trillion, to
motivate companies to disclose their impacts on the environment and
natural resources and take action to reduce them. CDP now holds the
largest collection globally of primary climate change, water and forest
risk commodities information and puts these insights at the heart of
strategic business, investment and policy decisions. Please visit www.cdp.net
or follow us @CDP
to find out more.

About Accenture

Accenture is a global management
consulting, technology
services and outsourcing
company, with approximately 281,000 people serving clients in more than
120 countries. Combining unparalleled experience, comprehensive
capabilities across all industries and business functions, and extensive
research on the world’s most successful companies, Accenture
collaborates with clients to help them become high-performance
businesses and governments. The company generated net revenues of
US$28.6 billion for the fiscal year ended Aug. 31, 2013. Its home page
is www.accenture.com.